Synergies and price trends in sequential auctions

In this paper we consider sequential second-price auctions where an individual's value for a bundle of objects is either greater than the sum of the values for the objects separately (positive synergy) or less than the sum (negative synergy). We show that the existence of positive synergies implies declining expected prices. When synergies are negative, expected prices are increasing. There are several corollaries. First, the seller is indifferent between selling the objects simultaneously as a bundle or sequentially when synergies are positive. Second, when synergies are negative, the expected revenue generated by the simultaneous auction can be larger or smaller than the expected revenue generated by the sequential auction. In addition, in the presence of positive synergies, an option to buy the additional object at the price of the first object is never exercised in the symmetric equilibrium and the seller's revenue is unchanged. Under negative synergies, in contrast, if there is an equilibrium where the option is never exercised, then equilibrium prices may either increase or decrease and, therefore, the net effect on the seller's revenue of the introduction of an option is ambiguous. Finally, we examine a special case with asymmetric players who have distinct synergies. In this example, even if one player has positive synergies and the other has negative synergies, it is still possible for expected prices to decline.Received: 12 December 2000, Accepted: 1 May 2002, JEL Classification: D44Flavio Menezes acknowledges the financial support from ARC (Grant A000000055) and CNPq. Monteiro acknowledges the financial support from CNPq and the hospitality of CERSEM where part of this paper has been written. We thank Richard Engelbrecht-Wiggans, Peter Sørensen and two anonymous referees for useful comments.     

Incomplete markets, continuum of states and default

Summary. We show that when bankruptcy, subject to penalties, is allowed, it is possible to prove the existence of equilibrium in a model with a continuum of states without imposing any assumptions on ex-post endowments.Received: November 20, 1995; revised version: September 16, 1996This revised version was published online in February 2005 with corrections to the cover date.     

Forecasting banking crises with dynamic panel probit models

Banking crises are rare events, but when they occur, their consequences are often dramatic. The aim of this paper is to contribute to the toolkit of early warning models that is available to policy makers by exploring the dynamics and exuberances embedded in a panel dataset that covers 22 European countries over four decades (from 1970Q1 to 2012Q4). The in- and out-of-sample forecast performances of several (dynamic) probit models are evaluated, with the objective of developing common vulnerability indicators with early warning properties. The results obtained show that adding dynamic components and exuberance indicators to the models improves the performances of early warning models significantly.     

Reflections on digital innovation

The paper by Henfridsson et al. opens up a new agenda for IS research on the content and process of digital innovation. The crucial element in their perspective is the role of recombination in innovation. They supplement an emphasis on design recombination with a symmetrical emphasis on use recombination. While supporting Henfridsson et al.'s overall argument, I point out how central parts overlap with and are extended in disciplines outside IS research.     

Reversible Relationship between Quantitative and Qualitative Data in Self-Consciousness Research: A Normative Semiotic Model for the Phenomenological Dialogue between Data and Capta

The aim of this study was to explore modes of integration of quantitative and qualitative data to verify existence of psychological constructs. Data obtained with a Likert-type rating scale and with narrative accounts of significant life-events were compared and integrated via logical analysis to examine the psychological construct of self-consciousness. Undergraduates between 17 and 32 years of age (78 females and 23 males) participated. Psychometric analysis of the scale classified the subjects focus of self-consciousness (public and private) into three levels: high, average or low. Independent judges evaluated self-consciousness profiles from the narrative accounts. Analysis verified the compatibility between self-consciousness scale measurements and self-consciousness profiles on narrative accounts. The results illustrate possibilities for and limitations of such comparisons, and also suggest criteria for comparing the same phenomenon in different contexts. Guidelines for choice of instrumentation in gathering data for research and practice are also presented.     

A NOTE ON CHAMBERS'S “LONG MEMORY AND AGGREGATION IN MACROECONOMIC TIME SERIES”*

This note reviews some results on aggregating discrete‐time long memory processes, providing a formula for the spectrum of the aggregates that considers the aliasing effect.     

Auctions with endogenous participation

We study endogenous-participation auctions where bidders only know the number of potential participants. After seeing their values for the object, potential participants decide whether or not to enter the auction. They may not want to enter the auction since they have to pay participation costs. We characterize equilibrium bidding strategies and entry decisions for both first- and second-price sealed-bid auctions when participation is endogenous. We show that there is a pure strategy entry equilibrium where only bidders with values greater than a certain cut-off point actually bid. In this context, both types of auctions generate the same expected revenue. We also show that, contrary to the predictions of the fixed number of bidders literature, the seller's expected revenue may decrease when the number of potential participants increases. In addition, we show that it is optimal for the seller to charge an entry fee, which contrasts with results from the existing literature on auctions with entry. As in the fixed-n literature, we show that first-price auctions generate more expected revenue than second-price auctions when buyers are risk-averse. Finally, we characterize the optimal auction – the auction that maximizes the seller's expected revenue – by using a direct revelation mechanism. The optimal auction involves a reserve price larger than the optimal reserve price in the fixed-n literature. The winner's payment is the second highest bid less the participation cost and losers receive a subsidy equal to the participation cost. Received: 17 August 1998 / 21 September 1999     

Organizations as Spaces for Caring: A Case of an Anti-trafficking Organization in India

Journal of Business Ethics - Prior research has shown that human trafficking has multiple facets and is deeply enmeshed in societies around the world. Two central challenges for anti-trafficking...     

Child Labor, School Attendance, and Intrahousehold Gender Bias in Brazil

An extensive survey data set of Brazilian households is usedto test whether intrahousehold gender bias affects the decisionsof mothers and fathers to send their sons and daughters to workand to school. An intrahousehold allocation model is examinedin which fathers and mothers may affect the education investmentand the child labor participation of their sons and daughtersdifferently because of differences in parental preferences ordifferences in how additional schooling affects sons' and daughters'acquisition of human capital. Brazilian household survey datafor 1998 are used to estimate the impact of each parent's educationon the labor market participation and school attendance of theirsons and daughters. For labor market participation, the father'seducation has a greater negative impact than the mother's educationon the labor status of sons. The father's education also hasa greater impact on sons' labor status than on daughters'. Forschooling decisions, the mother's education has a greater positiveimpact than the father's education on daughters' school attendance,but fathers have a greater positive impact on sons' school attendancethan on daughters'.